Business Directories

Platinum hits record at $2,124 on supply fears

Singapore, February 19, 2008

Platinum roared to a record high for the 14th straight session on Tuesday, topping $2,100 an ounce on fears of tight supply, after power problems in main producer South Africa disrupted mining.

Spot platinum hit a high of $2,124 an ounce, up from $2,105/2,115 an ounce late in London on Monday. The metal has gained more than 30 per cent this year on speculative buying ignited by worries of a widening supply and demand gap.

'We don't know when it's going to stop,' said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. 'But of course it's rising so fast. It's not healthy. It can't sustain the high level if there's no real demand,' said Leung.

More than 60 per cent of the world's platinum output is used as catalyst in vehicles, helping to clean exhaust fumes. Nearly 25 percent goes to jewellery making.

Demand for auto catalysts jumped 2.3 per cent to 4,235,000 ounces in 2007, from 4,140,000 ounces in 2006, according to refiner Johnson Matthey.

But demand from the jewellery sector slipped 1.5 per cent to 1,595,000 ounces last year, from 1,620,000 ounces in 2006.

Analysts say the global platinum deficit could widen to 400,000 to 500,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits.

'Fresh funds are flowing into the platinum market. The target can be, for a start, $2,200,' said William Kwan, a dealer at Phillip Futures in Singapore. 'Basically, there are no sellers in the market. Everyone is on a buying spree,' he added.-Reuters